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Governor Calms Teacher Pension Shift Worries

BERLIN – Worcester officials breathed a collective sigh of relief this week when Governor Martin O’Malley announced he would not pass a portion of the teacher pension costs off to the counties as expected, but some are waiting for the other shoe to drop.

On the eve of the Maryland General Assembly session that got underway this week, O’Malley told a delegation of county officials from around the state the budget he is about to present does not include a proposal to shift the teacher pension program to the local jurisdictions. O’Malley’s budget advisors had recommended passing as much as 40 percent of the teacher pension costs off to the counties, a move that would save the state an estimated $340 million per year, but the governor resisted the temptation to pass the buck to the local jurisdictions.

Locally, county officials were waiting with much trepidation the governor’s decision regarding a shift of the teacher pension costs at a time when the counties are already facing Draconian cuts in state aid. County Commissioner Bud Church said this week if Worcester had to shoulder a larger share of the teacher pension costs as proposed, it could be devastating to the county.

“It’s a huge issue,” he said. “If they were to drop their teacher’s pension share in our laps today, it would cost us anywhere from $4 million to $7 million.”

O’Malley assured county officials his budget did not include a shift of the teacher pension costs during the winter meeting of the Maryland Association of Counties (MaCo) in Cambridge this week.

“While other elected leaders may well offer other approaches, the balanced budget proposal I submit to the General Assembly later this month will not propose pension costs this year onto the counties,” he said.

While local elected officials were pleased with the governor’s reluctance to saddle the counties with millions in additional costs, they voiced concern the finished product might look entirely different than the initial one.

“Yes, he said it and a lot of people were happy to hear him say it, but there is still a lot of skepticism,” said Church. “Until the session closes and we see what they did or didn’t do, we’ll be holding our breath.”

Commissioner Virgil Shockley said O’Malley’s pledge was promising, but voiced concern Senate and House leaders might still try to push the pension costs off to the counties when they start tackling the estimated $1.6 billion deficit.

“O’Malley said he was not going to pass the teacher pensions off to the counties, but if you read between the lines, what he is really saying is he is not going to be the bad guy,” he said. “When the House and Senate get a crack at it, they could try to pass that off to the counties.”

Already, state lawmakers are exploring every possible means to reduce the deficit and balance the budget and the local jurisdictions will likely see a reduction in the level of state funding for some programs or increased fees for others. Shockley said the low hanging fruit as already been plucked, forcing the state to make even tougher decisions.

“They’re running out of choices,” he said. “All the easy choices have been made. They’re facing $1.6 billion and they’ve found about a billion of that, but they still need to make up that $600,000.”

Church said despite assurances from the governor on the teacher pension issue, the county can still expect further cuts from the state.

“We’re a long way from getting out of this box we’re in,” he said. “We can most assuredly count on more cuts coming from the state. They’re in a tough spot. The governor said no one, and repeated no one, was going to be happy with the budget. That means the counties, the municipalities and the employees.”

Shockley said waiting for the state’s final numbers put county officials in a tight spot when it comes to local budget decisions. While the state’s figures might not be known for months, already the declining property value assessments point to less revenue to work with.

“I’m really more concerned with next year’s budget,” he said. “If those assessments continue to decline with Ocean City coming up next year, if they come in lower than they did three years ago, you’re going to see a huge hit to the county coffers.”

Church agreed declining revenue coupled with increased cuts in state funding could put Worcester in a tight spot for this year and beyond.

“This year is bad, but we’re really worried about next year,” he said. “We’re going to be looking at major reduction of revenue.”

Nonetheless, county officials are confident they can present a balanced budget without layoffs, pay reductions, employee furloughs and other measures resorted to in recent years in other jurisdictions.

“If the state will leave us alone, we’ll be okay,” he said. “We’re surviving if the river doesn’t rise, and that’s about where we are right now. If the state doesn’t flood us, we’ll be okay.”

In the meantime, county officials are taking a wait-and-see approach to O’Malley’s proposed budget.